In today’s world, there are more methods for conducting a transaction in today’s world than ever in history. Technology has made our lives easier, especially when it comes to paying for things.
However, the many methods of payments available can make understanding the refund process in the digital age a little overwhelming. Two areas of finance that customers can benefit from understanding are how the debit card and credit card refund process work.
What is a credit card refund?
Credit card payments are not actually made by you. It is actually the credit card company that makes the payment on your behalf. When you make a purchase using your credit card your credit card company is lending you money that is based on your account spending limit. Once the purchase is made your available limit in your account will go down.
Therefore when you request a credit card refund, it won’t be in the form of cash. Rather, you’ll receive a credit on your account that is equal to the amount of purchase. This all begins when a merchant agrees to give you a refund on your credit card.
How long do credit card refunds take to process?
A credit card refund is easy to initiate, but will still take at least several days to complete. Typically a credit card refund will take 7 days or less to process but in some cases it can take several weeks.
To get the quickest refund possible, be sure to submit your refund request as soon as possible. Also, take note of any confirmation numbers, keep any receipts, and be sure to learn the rules so that you can stay on top of it. The retailer, method of return, and credit card issuers policy all affect refund time.
Refunds on credit card disputes
Credit card disputes can make the process of getting a refund take even longer. When resolving a dispute, remember that it is much faster to resolve the issue by working with a merchant than with a financial institution. One reason is that only a merchant would be able to cancel a pending transaction. Of course, this usually isn’t an option if the dispute is over a fraudulent charge, or if working the issue out with the merchant isn’t possible.
If you see something on your monthly statement that you would like to dispute, then the law states that you must do so within 60 days. If you end up filing a dispute, then the credit card company will have between 60 to 90 days to resolve the issue.
How do debit card refunds work?
Debit card refunds mainly depend on the merchant’s return policy. Some merchants will offer cash refunds or store credit, and some merchants will process the refund the same way that a credit card refund is processed by using the number or, if you’ve produced it, physically processing it with their equipment.
The refund process might reflect how you paid with your debit card, either by signature or by PIN entry. That is because the two types of transactions actually run on separate networks, and PIN debit card payments get stored and released on a 24-hour cycle from 4 pm to 4 pm EST the next day.
How long do debit card refunds take to process?
The most realistic time frame for a debit card refund is about 7 days, although if things are going very smoothly a basic refund will only take between 1 and 3 days.
The two largest factors that determine the length of time it takes to obtain a debit card refund are the card issuer and the merchant. Many online retailers may take a few days to even begin the process. It’s also possible that a merchant can give you an instant refund in the form of cash, or store credit, especially if you’ve used a PIN debit card.
Refunds on debit card disputes
Debit card disputes have the possibility of taking longer than credit card disputes because funds need to be moved into your bank account. For that reason, once a dispute or chargeback is filed it may take up to 90 days for the process to complete.
In many situations, a bank will apply a temporary refund, or provisional credit, while the dispute is being investigated. If the bank decides to refund you the money, that temporary provision would become permanent.
In the USA, merchants are liable for a chargeback for the most part. They bear the burden of proof and if no action is taken, then the cardholder wins by default.
Refunds on exclusive perks
Many credit card companies offer exclusive perks like rewards points, sign-up bonuses, or cash back incentives. These exclusive perks in different ways, but for the most part, rewards or perks gained from purchases will be withdrawn when a refund is made.
In some scenarios, it may depend on the actual card issuer. This is not always the case, but can sometimes be true for things like sign-up bonuses where there is usually an incentive to spend a few thousand dollars within a certain time frame of first receiving your card.
For example, if you spend $5,000 on a vacation and earn a bunch of rewards points for a specific brand of hotel and the trip gets canceled due to something like an illness or problem with the airline, it is possible that you could still keep those rewards points while also receiving a refund.
5 tips to get faster refunds
Speeding up a refund is possible in some, but not all, situations. Of course the sooner you submit your chargeback or refund request, the faster it will arrive. There are a few other actions you can take that may speed up the process.
Ask for a refund
Banks and credit card companies can’t do anything until a merchant responds. It’s always best to initially work with a merchant directly because you may have multiple options for a refund. It could be possible to get a store credit, or if you used a debit card, possibly cash back.
Both of these options are instant, and it’s possible that a merchant may ask you for other alternate options for issuing a refund.
Learn the policies
Different merchants have different return policies, and some don’t have any at all. Coupons, rewards, method of payment, and whether or not you have a receipt all factor into the return policy.
Most policies make it very difficult to “game the system.” Many merchants include a time frame in their policy, and you can speed up the process by contacting the merchant and asking them where they are at with the process. There have been studies that actually show that merchants tend to be a little bit lazy when it comes to refunding customers.
Get a receipt
It is true that a refund can be issued without a receipt but it is always better to have one. It makes both the refund process and if it comes to it, the dispute process goes along much more smoothly. Many times you will need to provide an ID if a receipt cannot be produced.
One of the reasons receipts help is because oftentimes purchases are itemized, and there is no way of telling the exact amount you paid for a product or service without one, you may be subject to getting the lowest price return or promotional price at the given time of return.
Obtain an authorization number
There may be instances where you could obtain what is called an authorization number from the merchant and then call the bank or credit card company and try to get them to push the process through faster.
If a charge on your card is voided, you can shave off 1 or 2 days by providing this number to a financial institution and they should be able to get this charge to fall off immediately.
Remember that persistence is key
Many credit card companies will not credit a refund until they absolutely have to by the requirements of law. They do this because they are able to generate interest while you wait for your refund. They do in fact, make a business out of their refund policy.
You can counter this by being persistent, working with the merchant, and touching base with your financial institution every single day. Sometimes it will even help if you and the merchant call the company at the same time.
You’re entitled to a refund
Throughout the entire process, know that you are entitled to a relatively speedy refund by law. Once you know how the refund process works, you may be enticed to pay differently for things in certain situations, or you may keep a closer eye on payments as they get documented in your accounts.
Being away and staying informed is a proactive way to prevent any future disputes, and it will also help speed up the refund process if an error or fraudulent charge ever does occur. If you have kept your receipts, submitted a written request, and have an understanding with the merchant, refunds can complete faster.
